Thousands of people put their financial trust in Bernie Madoff and his wealth management business. In December 2008 that trust was shattered when Madoff was arrested for running a $50 billion Ponzi scheme. Why did these people trust Madoff? How can we make better decisions about the leaders and companies we trust? Robert Hurley, Ph.D., professor of management at Fordham’s Schools of Business, delved into this topic during a Fordham at the Forefront presentation in Manhattan.
Nearly 100 alumni—representing all 10 schools of Fordham University—filled a room at the Roosevelt Hotel on May 1 for Fordham at the Forefront of Business Ethics: How to Make Smart Trust Decisions and Create High-Trust Organizations.
“We are at an all-time low in trust in Congress; trust in CEO credibility is at an all-time low; trust in banks—or restoring trust in banks—is at an all-time low,” Hurley said. “We have a trustworthiness problem.”
Low trust creates a snowball effect of subsequent challenges for businesses, Hurley said, including higher employee turnover, lower profits, less information sharing, and less innovation. “Companies become dysfunctional.”
The good news is that when these trust violations are “systemically produced, we can understand how to prevent them, how to detect them, and how to manage them,” said Hurley. “There will always be bad apples and rogue employees. That’s not the problem; the problem is bad barrels.”
Hurley offered a three-part solution: become better trust decision makers, develop more trustworthy leaders, get those trustworthy leaders to engineer trust into their organizations.
How can trustworthiness be assessed and built? Pulling from his book The Decision to Trust: How Leaders Create High-Trust Organizations (Jossey-Bass, 2012), Hurley outlined six factors: similarity, alignment of interests, benevolent concern, capability of competence, predictability and integrity, and communication. High-trust leaders, he asserted, are transparent, dependable, and care for others.
Some companies are setting the standard for trustworthiness, Hurley said, like Zappos, the SAS Institute, and GE, “by creating value within their organizations. All high-trust organizations are value-driven companies. All of these values—competence, integrity—can be embedded into companies and leaders.”
Hurley said Fordham is contributing to the solution through its Consortium for Trustworthy Organizations, which he directs and which the Schools of Business founded in August 2012 to provide research, tools, and solutions for leaders to build trustworthy organizations.
“We care as a Jesuit university about producing leaders that are ethical and trustworthy, and making the world a better place. In some ways, a lot of the Jesuit philosophy is encapsulated in this notion of trust and being trustworthy and benevolent; those things that are essential in the values at Fordham,” Hurley said. “Hopefully you’re agents of that.”
The Office of Alumni Relations hosts several Forefront events throughout the year in the New York City metro area and around the country, highlighting Fordham faculty members’ expertise in such areas as elections and campaigns, sustainability, and healthcare reform.
– Rachel Buttner